368 ECONOMIC HISTORY
South Seas1. The capital of the Company thus consisted
of Government securities. Its position was strengthened by
the Treaty of Utrecht (1713) in which Spain conferred on
England a limited right of trading with her colonies2. The
importance of the concession may easily be exaggerated:
it did not create a new sphere of trade but diverted the
existing trade, which passed through Spain, direct to Spanish
America. As a consequence the trade with Spain suffered
in spite of the establishment of English consuls in the Spanish
ports, " a thing which it has been almost impossible to
obtain hitherto"3. The concession was also detrimental to
Jamaica, whose traders were now ' entirely excluded from
the Spanish Indies' by the monopoly conferred upon the
English Company4.
The South The South Sea Company found that its limited oppor-
SeaBubbk- tunities of trade did not provide sufficient scope for the
credit, which it was in a position to raise on the basis of
its loan of ten million pounds to the Government. It
offered, therefore, to convert the whole national debt into
* a single redeemable obligation ' to the Company at a lower
rate of interest in return for the monopoly of British foreign
trade outside Europe5. This proposal was successfully
resisted by the Bank of England and the East India Com-
pany, whose privileges rested on the loans which they had
made to the State, and accordingly it was modified to ex-
clude their loans. The Government accepted the scheme and
a rapid rise ensued in the market value of the Company's
shares, which the artifices of the directors endeavoured to
keep high by an undertaking to pay an annual dividend
for the next twelve years of not less than 50 per cent.6.
1 Statutes, ix. 436, 442. The charter of incorporation was signed in
1711. The monopoly embraced the east of South America from the River
Orinoco to the south of Tierra del Fuego, and along all the west coast. It
did not include Dutch or Portuguese possessions which were to remain
open to all English traders : Scott, Joint-Stock Companies, iii. 295.
2 Viz. the right to send 4800 negroes yearly for 30 years (the ' Assiento'
pact). Philip allowed the Company for 30 years to send an annual ship, in
the profits of which he was to participate: The British Merchant (ed.
1721), iii. 256 ; Macpherson, Annals of Commerce, iii. 32-33.
8 Hist. MSS. Comm. Polwarth, i. 45 (1716), 638. See infra, Appendix,
p. 500, No. 2.
4 The British Merchant (ed. 1721), iii. 256-258.
6 Scott, Joint-Stock Companies, iii. 296-298, 314.
• Macpherson, Annals of Commerce, iii. 101.